The Banking Association of South Africa (Basa) has outlined the financial relief measures currently offered by its members, as well as the limitations attached to them.

Basa said that from the period from 16 March 2020 to 25 April 2020, the country’s banks have Ccsh flow relief, including payment breaks, to individual customers worth R7.74 billion.

They have provided similar relief worth to commercial, small and medium enterprises worth R7.29 billion, it said.

“Of the over 1,200,000 individuals who applied for some form of relief, over 852,000 have already received assistance. Applications are constantly being assessed.

“Of the 90,000 commercial, small and medium enterprises that applied for some form of relief, over 75,000 have already received assistance. Applications are constantly being assessed.”

Basa said that these numbers are likely to increase significantly over the coming period as more relief is approved.

Options available

Basa said that relief measures may differ between banks, but are available to customers in good standing, who cannot meet their credit agreement payments in the short-term as a result of the impact of the Covid- 19 pandemic and national lockdown, and who will most likely be able to meet their obligations again after the relief period.

A customer is considered to be in good standing if they are up to date with their payments on 29 February 2020 and have a good track record of paying their debts on time.

This covers a high percentage of bank customers, Basa said.

While it is in the best interest of all customers who can afford to meet their liabilities on time to continue to do so, the group said that remedies offered by the banks for those in financial distress may include:

Assistance with processing credit life insurance claims. Credit life insurance policies differ but may cover a period of loan repayments or the outstanding debt in the event of death, disability or retrenchment or loss of income. Banks are communicating with their customers that have credit life insurance and are helping them to initiate a claim, where the policy is linked to the bank’s credit agreement. In many cases this is the most viable remedy for customers with cover;

Instalment reduction for a limited period. Interest and fees on loans will still accumulate and will have to be paid by the customer. This may result in an extension of the term of the loan, which could incur higher costs;

A payment break. Interest and fees on the respective loans will still accumulate and will have to be paid by the customer. This may result in an extension of the term of the loan, which could incur higher costs. Such payment breaks vary from between one and three months – and are provided either pro-actively by the bank or at the request of the customer – depending on their credit risk guidelines;

The relief measures also apply to Shariah-compliant financial services and products. Customers who are uncertain as to what relief is available for Shariah-compliant products are urged to contact their bank;

Customers who are already in debt review should contact their debt counsellor who will then motivate a new repayment proposal to the bank, which will be considered case-by-case;

Small businesses that are already in business rescue should contact their Business Rescue Practitioner (BRP). Banks will deal with these enterprises case-by-case.

While these measures will provide assistance, Basa noted that the country’s banks are tightly regulated as they hold in trust the salaries and savings of South Africa’s workers, professionals and businesses.

“Our customers are both depositors and borrowers,” it said. “Deposits extended as loans must be recovered to allow banks to repay, with interest, customers who expect their money on demand.

“The relief measures granted by banks do not envisage debt write-off, but rather leniency in terms of the repayment of loans for a period.

“We strongly encourage all customers to continue to meet their banking and financial services obligations as best they can, to help banks assist as many customers as possible.”